Participation of the Corporation in the world business relations
"POLITICAL SUPPORT TO THE US-RUSSIAN COOPERATION"
NEW YORK, WASHINGTON May 4 - 8 2001
Memorandum – Address to the Presidents of Russia and the USA, a list of
trends of the US-Russian cooperation, discussed at the Forum, a text of
the analytical report, prepared by the Korben International Industrial
& Financial Corporation at the request of the Russian Organizing
World Forum 4-8 May 2001 New York, Washington,
the Russian Federation
the United States of America
The World Forum "Political Support to the US-Russian Cooperation"
expresses to you its big gratitude for practical steps, designed to
stabilize, strengthen and develop international, inter-state and
foreign economic relations which are exemplified by staging and
successful holding of this Forum.
The Forum is memorable by the fact it is being held in the beginning of
the third millennium and the XXI century and sets itself the task of
finding new ways for US-Russian cooperation, enabling to attain
practical results in the fields of economy, finance, industry, science,
culture and education.
Your activities, esteemed Mr. President of the Russian Federation and
esteemed Mr. President of the United States of America herald new
phases of positive development of the relations between the two great
nations and create prerequisites for favorable development of the world
The World Forum "Political Support to the US-Russian Cooperation"
addresses a request to you to support its initiatives and wishes you
success in your activities for the glory of the peoples of Russia and
the USA, who committed you to act on their behalf and for the welfare
The Memorandum was approved at the final Plenary Session of the Forum.
May 8 2001, Washington, USA
Trends of the US-Russian cooperation,
discussed at the World Forum
"Political Support to the US-Russian Cooperation"
May 4-8 2001, New York - Washington, USA
1. Close alliance of the Russia and the NATO, resulting in a
full-fledged membership of Russia in this military and political
2. Joint work of Russia, the USA and other NATO-member countries
designed to create a system of anti-missile defense.
3. Creation of a powerful unified military and intelligence force to
fight terrorism, drug trafficking and proliferation of mass-destruction
4. Joint programs and scientific research in the fields of space,
medicine, ecology etc.
5. Abolishment of trade and other discriminating sanctions against
Russia. Writing off or restructuring of the former USSR debt, inherited
6. Creation of a full-scale US University in Moscow subject to the
agreement made with George Bush Senior in 1992.
7. Arranging Internet communications between the US and Russian schools
and universities and development of joint remote training programs.
Considerable widening of cultural and educational exchanges.
8. Support of democratic non-governmental organizations and mass media.
9. Improvement of the process of US visas issuance to Russian citizens.
10. The use of Russian know-how, personnel and equipment for
forecasting and liquidation of fires and their aftereffects as
well as other calamities in the US territory.
Made by the President of Korben International, Peter L. Korotkevich, at
Respected Ladies and Gentlemen!
Respected Mr. Chairman!
On behalf of Korben International Industrial & Financial
Corporation allow me to greet the Seventh World Forum of the US-Russian
cooperation, to express our big gratitude to the organizing committee
and representatives of the Forum for the invitation to participate here
and to wish all participants success in its holding.
Respected ladies and gentlemen, the Seventh World Forum of the
US-Russian cooperation is being held in the beginning of the third
millennium and in the new XXI century. The elections of Vladimir Putin
as the Russian President and George Bush (Junior) as the US President
herald new stages of the development of economic, financial, military
and political relations between the two great nations disposing of a
great potential, acquired over the last century which will result in
formation of an absolutely new model of the development of global
geopolitical system, that may predetermine new international and
inter-state relations, change in the balance of forces, resources and
creation of new conditions for the development of the world community.
Respected ladies and gentlemen, this Forum pursuits the aim of finding
new ways of US-Russian cooperation in the fields of business, science,
culture and education as well as attraction of foreign investments into
Russia. There is no escape from pointing out that the strategy,
mechanisms and forms of the development of interstate and
foreign-economic relations in the financial, economic, scientific,
technical, educational and social spheres are first of all conditioned
by the internal and external politics of a country, a stable regulatory
and legislative base, governing relations between all the subjects of
the business activity and by measures, taken by the state authorities
to protect rights to ownership and investments, indiscriminately of
their country of origin.
We think, that a loss of priority, strategically important for Russia
lines of development resulting in a disruption of financial and credit
system, intentional depreciation of assets, owned by the state,
negative trends in financial, stock and exchange markets of the
country, brought about a collapse of the foundation of its economic
potential, a production base – manufacturing and processing industry,
which has been built over the last 50-60 years by means of material and
human resources of the entire state. An overall result was a system
crises, inflation, unemployment, production downfall, price increase,
corruption and arbitrary rule of authorities, illegality and a wild
outburst of crime.
A lack of clear economic and social priorities in the development of
the economy and a dominating place of the monetary and finance sphere
over the industry, the fundamental constituent of the public
production, monetary and credit emission, not secured with commodity
mass, and an excessive increase of the interest rate in effect over
many years, have made it possible to use the funds available at the
market mostly for short-term speculative transactions. At the same time
industrial enterprises appeared to be entirely barred from credit
resources. As a result decline in production exceeded 50% of the level
of 1991 and the amount of non-payments between enterprises actually
accounted for a half of the state budget.
The result was also a downfall of the Russian machine and technical
export and that of products with a high added value, a reduction of the
export of Russian goods at the most advantageous and perspective world
goods markets. The major part of the export balance fell to the share
of non-renewable natural resources. Artificially lowered rouble rate
under the pretext of export stimulation and a necessity to replenish
budget revenue brought about an unwinding of the inflation spiral. The
result was cessation of investment financing of the industry and its
further financial suffocation by way of excessive taxation. The
financial and credit system instead of serving production began to have
an active but ambiguous effect on production.
Mistakes made in financial and credit sphere and in the field of
privatization, were supplemented with mistakes in the field of
export-import and industrial policy. Uncontrolled export of oil and gas
as well as prolonged lack of exchange and export control have made it
possible that foreign currency assets of the Russian residents exceeded
over some estimates some USD 50 bln. These exchange resources, obtained
from export of natural wealth did go neither into the Russian industry,
nor for repayment of the foreign debt. At best they were used for
crediting of supplies of western equipment designed to upgrade fuel and
energy complex in order to further widen export of raw materials.
The politics of liberalizing import of the food stuffs to the detriment
of domestic manufactures has made supply of large industrial centers
dependent on import.
All these problems have been building up over many years and were also
a result of destructive manpower policy, held in Russia as well as
purposeful disruption of the governmental bodies, underway in the
country over 1991 - 1999 on a massive scale.
It is our opinion that the governmental bodies disposing of economic
levers have to resolve at present the two main tasks:
- to overcome decline in production, reinstate normal investment
process and to keep within strict limits finance and credit policy in
order to hamper inflation;
- to find optimum approach to minimize aftereffects of the existent
economic structure- bankruptcies of enterprises and unemployment,
leaving in effect strict financial and credit policy.
These two main tasks are complicated and go along with a number of
current economic and political tasks: to reduce tax burden for a fair
manufacturer, increase revenues of the budget and to provide social
support for a considerable part of the Russian population.
A number of other special features of the current economic and
financial situation in the country are also noteworthy. Firstly, mining
sectors of the economy, mainly fuel and energy sector, continue to play
a priority role. The Russian Ministry of the Economy estimates the
share of these sectors to remain at the level of 40,5%. This structure
predetermines continuous building up of export of mineral resources
while potential of science-saving engineering products, manufactured on
the basis of the modern know-how, and consumer products and services
has been steadily reduced. The main inflow of foreign investments
within the framework of state credits also falls to the share of the
mining sector, while the efficient strategy of their attraction,
developed by the state, shall take into account the interests of all
The financial sphere continues to be characterized by a decline in
Rouble rate in respect to the main world currencies, which does not
reflect the actual price of the national riches incorporating fixed
assets, land, prospected natural resources, valued at USD 127 trillions
and educational potential constituting the basis of the strategic
potential of Russia. Besides financial transactions in Russia do not
bear investment but rather a short-term and speculative character.
The reason for a lack of effect of the national riches of the country
on the Rouble rate lies in the fact that the major part of financial
and economic levers of power are still centered in the hands of the
state structures, which do not ensure their efficient use. This can be
seen from analysis of condition of the domestic financial market where
the key role is allocated to the centralized credit resources coming
from the state budget whose revenues are built from taxes levied on
profits from export of mineral resources and on consumer goods import.
One cannot forget here a steadily growing external and internal debt.
The total volume of investments after financial crisis of the 1998 has
gone down twofold to account for 40% in respect to the pre-crisis
level, while the basic production assets have become weared at 60%.
Some experts estimate that some 840 thousand sets and units of
equipment have been withdrawn from circulation. Lack of incentives for
collecting investment funds makes the enterprises to use depreciation
fund assets to replenish circulating assets, while the major part of
the foreign investments both private and state allocated continues to
be centered in a narrow community of mining sectors, firstly oil and
gas industry. We think that investment policy should be directed first
of all to the renewal of the existing fixed assets, improvement of
their composition, upgrading, re-profiling and re-equipment of the
insolvent and bankrupted enterprises. In this case attracted funds
shall be invested into the industrial potential of the insolvent
Russian enterprises undergoing re-profiling. This process will enable
to stop further growth of the state debt existing by reason of
financing insolvent enterprises, wheeler-dealer financing,
redistribution of state property between monopolistic structures, and
to privatize these enterprises with participation of foreign investors,
to create civilized stock market, to issue fully collateralized Russian
securities to be sold at the world stock markets. The investment policy
should also stipulate creation in the country of a favorable investment
climate including allocation of preferential terms in taxation. In our
mind investments shall be mainly shifted into production and
The afore mentioned approach stipulates resolution of a few basic
problems faced by the Russian economy, in particular amelioration of
the financial condition of enterprises, resolving the problem of
default in payments, holding of efficient structural reform of the
industry, avoiding of negative social effects of bankruptcies and
gradual formation of the class of proprietors, interested in
development of profitable production. All this will promote integration
of Russia into a community of countries with highly developed market
Considering complicated financial and economic situation in Russia,
which demands a search of adequate financial mechanisms of access to
the world sources of financing without increase in the overall debt of
the country, in order to attract investments into the economy we have
developed a "Program of increase of the capital", which has undergone
an expert examination in 1995 and was approved by the Administrative
Department of the President of the Russian Federation, the Fund of
Presidential programs, the Ministry of Finances of the Russian
Federation, the State Committee for the Control of the State Property
(Mingosimushestvo), as well as by the interested Ministries and
Departments, by the Supervisory Board of the Fund of Presidential
Programs of the Russian Federation, the Governmental Organizations, the
Ministries and Departments of the Russian Federation. The Program is
based on holding of transactions with securities, at the world
financial and stock markets, secured with tangible assets owned by
Russia. This collateral at the same time is not supposed to be sold but
increased through a steady increase of the tangible assets, belonging
to the treasury. Transactions with securities shall be additionally
guaranteed by the financial guarantees of the world recognized
first-rate financial institutions which will enable to ensure influx of
capital into the organizations taking part in the program, execution of
the joint programs and projects, designed to attract investments into
the priority spheres of Russian economy under the state guarantees and
debt liabilities. All together this will enable to open for Russia the
way to the international capital markets and to mobilize additional
This program, giving the Russian party a fixed guaranteed profit, has a
constant character and stipulates opportunity of increasing the scope
of operations by way of capitalizing on the received profit. Moreover
it is guaranteed that no claims can be made in respect of this
collateral on the part of third persons including those, which relate
to the external debt. The risk for the Russian party is hereby
Profits received from commercialization of financial instruments will
enable to carry out restructuring of the Russian external debt owed to
the London and Paris clubs, to strengthen Russian financial and
economic system, to avoid financial crisis in the country and to
allocate part of the funds into infrastructure development programs,
social and humanitarian projects in Russia.
Introduction of the financial mechanisms, ensuring inflow of capital,
required to mobilize construction industry, production sectors,
non-manufacturing businesses and trade will enable to create new
working places in every country. Inflow of funds to the population will
grow up respectively resulting in an improvement of life level and
creation of a stock of highly liquid assets, capable to serve as
additional collateral for any transactions, including stock
transactions at the domestic and foreign market. The afore mentioned
mechanisms will also enable to increase inflow of inexpensive capitals
required for the development of the state, to speed up domestic
turnovers, make bigger investments into industry to achieve financial
stability and gradual stabilization of the entire finance and banking
Respected ladies and gentlemen, considering the character of the Forum
let me focus your attention to a very important to my mind issue which
may be dominating in a wide spectrum of the problems in question – the
issue of structural transformations, carried out at present by
President V. Putin.
My personal, long-term practical experience of work with the top
management of the country and the state machinery gives me all the
grounds to publicly come out with my assumptions and to support
promising plans carried out by the President as well as the course of
the state development for the next years.
It has been already long since Russia was last governed by intelligent,
educated and sensible people, capable to put the interests of the state
and people above their personal ones.
The official statement of the Russian President V. Putin about clearing
off former USSR debt liabilities, payable to the London and Paris clubs
as well as joint efforts of the Russian, US and European law
enforcement bodies (Ministry of the Interior, General Prosecutor’s
Office, Interpol and the FBI), to oppose, suppress and to eliminate
international organized crime groups, specializing in money laundering,
illegal drug trafficking and terrorism testify about unwavering purpose
of Russia to build interstate relations on a mutually advantageous,
equal and partnership like basis.
Russia disposes of big potential opportunities however to resolve the
above specified problems it is first of all required to ensure
implementation of the legislative acts and Interstate Agreements,
ensuring protection of property, owned by foreign investors who are the
subjects of international and foreign economic relations, to enforce
laws, to equal in rights non-residents with residents and/or to lift
restrictions on transactions in the financial and stock markets, in
effect in the territory of the Russian Federation in respect to foreign
financial, banking and insurance companies. The government of the
Russian Federation shall provide state guarantees to the foreign states
and their residents, operating in the territory of the Russian
Federation and creating material sphere of production by attracting
foreign material and financial resources, advanced equipment and know
how to resolve the tasks of projects financing on a self-repayment
We think that implementation of the offered measures will enable to
achieve growth of production, productive forces and means of
production, to reduce budget deficit, increase GDP, replenish Federal
Budget and to create additional working places. This will also enable
to improve economic efficiency, to bring into turnover and to use
buried reserve of economic, financial, resource, industrial and
technical capacities and to invest or reinvest capitals at the approval
of foreign investors for financing of the Federal programs of the
Russian Federation as well as to attract in a near term future through
investment financing additionally some USD 250 bln. for the Russian
It is our opinion that only by uniting efforts we will manage to
achieve positive results.
In conclusion let me once again wish the Seventh World Forum of the
US-Russian cooperation a successive work and achievement of the set
goals. And may the Lord help us all!
Considering the above we have prepared and annex hereto the Memorandum
– An Address of the Seventh World Forum of the US-Russian Cooperation
to the President of the United States of America, George Bush and the
President of Russia, Vladimir Putin.
"Korben International Industrial & Financial Corporation, Inc."
Academician, Peter L. Korotkevich